Cuomo wants voluntary payroll tax to ease pain of US tax law

Cuomo wants voluntary payroll tax to ease pain of US tax law

By DAVID KLEPPER

Feb. 12, 2018

ALBANY, N.Y. (AP) — New York Gov. Andrew Cuomo's administration laid out an ambitious plan Monday to restructure the state's tax code to ease the burden of the recently enacted federal law.

The centerpiece of the Democrat's proposal is a voluntary payroll tax that companies could adopt in lieu of the existing income tax paid by workers. The recently enacted federal tax law will raise many New Yorkers' federal taxes by sharply capping a deduction for state and local taxes that was especially popular in high-tax states. Shifting to a state payroll tax instead of an income tax is seen as one way to reduce employees' federal tax liability.

Take-home pay would remain the same for workers, and businesses wouldn't see any additional taxes, according to the administration's plan. The switch would be optional, and the changes phased in, to minimize confusion for workers and businesses.

"We are taking action to protect hardworking New Yorkers from this attack from Washington," Cuomo said in a statement. "With these reforms to our tax code, we are doing everything we can to protect the rights and wallets of families across New York."

Another proposal from Cuomo includes creating a tax credit for individuals who make charitable contributions to public education or health care programs. Taxpayers making such contributions would get a deduction on their federal taxes. Lawmakers in California are considering a similar move.

The payroll tax proposal, which would require legislative approval, prompted mixed reactions and some skepticism. Business leaders said they aren't sure how many businesses might sign up for a new, potentially confusing tax system. And Republicans say Cuomo should focus on lowering state taxes instead of finding ways to circumvent the federal tax code.

"From the conversations we've had it seems that the businesses who would take advantage of this are fairly narrow in scope," said Zack Hutchins, spokesman for the Business Council of New York State, a leading business advocacy group.

The conservative fiscal think-tank Reclaim New York blasted Cuomo's ideas as a "tax avoidance scheme." Republican Senate Leader John Flanagan of Long Island noted that Cuomo's state budget recommendation includes $1 billion in new state taxes and fees.

"We should be cutting taxes, not raising them," Flanagan said.

Cuomo has vowed to sue the federal government over the tax law. His proposed tax changes are included in his budget proposal, now the subject of negotiations with lawmakers. A final budget is expected to be approved by April 1.

Several other budget-related proposals were announced by the governor's office on Monday. They include one regarding sex offenders that would prohibit level two and three offenders whose victims were under 13 from being within 1,000 feet of a pre-K or kindergarten school.

Cuomo also wants to set aside $7 million for counties to offer early voting up to 12 days before Election Day. The measure is part of voting reforms initiatives Cuomo says will improve the state's antiquated voting system. Thirty-seven states and the District of Columbia currently allow voters to cast ballots in person before Election Day.